The violence poses a major test for President Abdel Fattah al-Sisi, the former army chief who has pledged to wipe out the militants.
The military deployed F-16 warplanes yesterday to bomb IS fighters who battled security forces on the streets of the North Sinai town of Sheikh Zuweid after launching a surprise dawn blitz on army checkpoints.
The military said 17 soldiers and 100 militants had been killed. Medical and security officials said at least 70 people, mostly soldiers, had died along with dozens of jihadists. The reason for the discrepancy in the tolls was unclear.
"We have the will and determination to root out this black terrorism," it added. "We will not stop until Sinai is cleansed of all the dens of terror."
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The White House condemned the unprecedented wave of attacks, which came two days after state prosecutor Hisham Barakat was assassinated in a Cairo car bombing, the most senior government official killed in the jihadist insurgency.
"The United States stands resolutely with Egypt amidst the spate of terrorist attacks ...And will continue to assist Egypt in addressing these threats to its security," the US National Security Council said.
"Victory or martyrdom," said a front-page headline in Al-Ghomuriya. "Revenge," said a headline in Al-Akhbar.
The military spokesman posted photographs on his Facebook page of militants killed in the fighting.
The Sinai attacks were the most brazen in their scope since jihadists launched an insurgency in 2013 after the army, under Sisi's command, overthrew Islamist president Mohamed Morsi.
Militants took over rooftops and fired rocket-propelled grenades at a police station in Sheikh Zuweid after mining its exits to block reinforcements, a police colonel said.
"For hours the terrorists moved freely in the streets which they had mined," Ayman Mohsen, a resident from Sheikh Zweid who witnessed Wednesday's clashes, told AFP.
"This is war," a senior military officer told AFP. "It's unprecedented, in the number of terrorists involved and the type of weapons they are using.